Initial Public Offerings and the Local Economy

67 Pages Posted: 14 Sep 2017 Last revised: 18 Mar 2022

See all articles by Jess Cornaggia

Jess Cornaggia

Pennsylvania State University - Department of Finance

Matthew Gustafson

Pennsylvania State University - Smeal College of Business

Jason D. Kotter

Brigham Young University - Department of Finance

Kevin Pisciotta

University of Kansas - School of Business

Date Written: March 14, 2022

Abstract

We find that areas hosting large companies that go public experience muted growth in employment, establishments, and population, relative to areas where similar firms remain private. These effects initiate in the tradable sector and follow in the non-tradable sector, are more pronounced in densely populated areas, and are strongest near the IPO firm’s headquarters. Establishment-level analyses suggest that 24% to 37% of the effect derives directly from the firm itself with the remaining portion being due to spillover effects. Overall, our results indicate that macroeconomic gains from IPOs trade off against disruptions in local agglomeration economies where public firms originate.

Keywords: IPO, Economic Growth

JEL Classification: G32, J21, O47, R11

Suggested Citation

Cornaggia, Jess and Gustafson, Matthew and Kotter, Jason D. and Pisciotta, Kevin, Initial Public Offerings and the Local Economy (March 14, 2022). Available at SSRN: https://ssrn.com/abstract=3036176 or http://dx.doi.org/10.2139/ssrn.3036176

Jess Cornaggia (Contact Author)

Pennsylvania State University - Department of Finance ( email )

University Park, PA 16802
United States

HOME PAGE: http://jesscornaggia.com

Matthew Gustafson

Pennsylvania State University - Smeal College of Business ( email )

East Park Avenue
University Park, PA 16802
United States

Jason D. Kotter

Brigham Young University - Department of Finance ( email )

United States

Kevin Pisciotta

University of Kansas - School of Business ( email )

Capital Federal Hall
1654 Naismith Dr
Lawrence, KS 66045
United States

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